Burford Capital: Fast-Track Judgment Gains Ground in United Arab Emirates
The UAE has long positioned itself as the leading center for international trade and investment in the Middle East due to its strategic location, liberal business practices, and the influx of wealthy expatriates over the past decade. . However, the country’s civil justice system often hampers successful asset recovery, especially given the slow pace of civil litigation proceedings in first instance courts in the various Emirates.
Claims can take years to progress through UAE courts, and parties can take advantage of various interim requests and delay tactics to drag first instance judgments, as well as to exercise an automatic right of appeal. (as opposed to the background). Expanding the scope of requests for an order for payment – a mechanism for ex part judgments-is a timely solution to this problem and a welcome development in the region as it leads to an expedited trial process and shortens the waiting time for a judgment from several years to a few weeks. Below, we detail the process and benefits of payment order requests and how they help requesters to quickly recover their assets in the UAE.
How payment order requests work
Payment order requests are an increasingly common solution for creditors in the United Arab Emirates. Amendments to the Implementing Regulations of Civil Procedure Law No. 11 of 1992, which details the method and procedures for civil and commercial disputes, have broadened the scope of requests for an expedited payment order with regard to debts admitted, and the court’s approach recently suggests that such assertions now must be brought under the expedited procedure.
To file a payment order request, a creditor must:
Serve a written request on the debtor (ideally issued by a notary) and allow five days to elapse
Gather proof that the request for payment has been made and ideally recognized by the debtor
File an application that includes the required evidence and details in a regular return
In particular, there are no additional costs apart from the normal court costs to file a request for a payment order; in Dubai, for example, fees are typically 6% of the claim value and capped at $ 10,980
Courts must rule on the claim within three days of submission and often do so without notifying debtors. Once the claim has been accepted, the creditor must notify the debtor within three months. More importantly, payment orders are eligible for expedited execution; execution can begin immediately notwithstanding any appeal (or the appeal time has not expired). This expedited execution contrasts sharply with general trial court practice and is crucial for claimants seeking capital earlier.
The advantages of requesting a payment order request
The biggest advantage of a payment order request is speed. The procedure itself is fast and decisions are usually received within three days. They are also immediately enforceable, unlike a classic civil judgment, which is only enforceable after the expiry of the 30-day period for the appeal or following a judgment of the Court of Appeal. This alone saves applicants valuable time and money and reduces risk. In addition, the ex part the nature of payment order requests imposes a shorter appeal period of 15 days and, when combined with immediate execution, may cause debtors to commit.
Prior to the Executive Settlement, payment order requests could only be used for claims against financial instruments or commercial paper such as promissory notes, checks and bills of exchange. Recent changes confirm that the scope can now include any case of debt confirmed in writing, for example, a bank requesting repayment of amounts owed under a facility agreement. It also allows you to claim interest on unpaid debt.
In addition, recent decisions of the Dubai Court of Cassation have attempted to clarify the scope and validity of the order for payment process. In September 2020, the court incorporated a broad interpretation of âdebts confirmed in writingâ to include a large number of disputes relating to contractual debts. In June 2021, the court clarified that the order for payment procedure should be used except in the event of a “serious dispute” between the parties over the debt. As both judgments are recent, there is still no significant case law to help determine how they are applied in practice.
Although the doctrine of the precedent does not apply in the United Arab Emirates as in ordinary courts, the judgment of the Court of Cassation must be convincing and payment order judgments are therefore a faster means of prosecuting cases. debtors otherwise seeking to avoid payment. While enforcement in other jurisdictions is subject to confirmation by local courts, payment order requests are likely to be a new problem for many foreign courts. There is no policy reason why they would not be effective in other courts, especially if efforts are made to sufficiently inform the debtor of the proceedings in the UAE before substantial action is taken to abroad to execute the payment order.
Different emirates take different approaches
While the regulations apply uniformly across the UAE, in practice payment order requests are handled differently depending on the emirate in which the request is made. Courts in Dubai generally allow immediate enforcement, while courts in Abu Dhabi and Sharjah generally require that a claimant wait until the 15th day the appeal period has elapsed or an appeal has been decided. before the filing of the request for execution. While the appeal period is minor compared to the years applicants would otherwise have to wait, it is important that they be aware of these nuances.
As with most new processes, judges can also be cautious and reject the request, especially in cases where the request is not âstraightforwardâ i.e. not based on a promissory note, a check or a bill of exchange. In addition, not all forms of debt can be repaired by payment order requests. In the event of refusal, the creditor would have no choice but to resume the procedure according to the standard procedure (in which case he would be required to pay again the non-negligible legal costs).
Partnering with an expert is the crucial first step
The fact that payment order requests are becoming increasingly popular in the UAE is a positive development for applicants pursuing enforcement in the region, as the process is generally long, expensive and often unpredictable. Claimants can use expedited claims to save time and money and increase pressure on late-paying debtors.
Since payment order requests are a relatively new and little-used solution in the United Arab Emirates to date, it is imperative to work with an experienced partner. Burford’s in-house team of asset recovery and enforcement specialists, working with local attorneys, can navigate the unique rules and processes of courts in the United Arab Emirates and help clients pursue collections. in various multinational surveys in the Middle East. By working with a partner with the right experience and knowledge of the region, applicants can unlock the full potential of a payment order request.